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Pope Francis keeps Vatican bank open

Pope Francis, seen here in Vatican City shortly after meeting with Queen Elizabeth II of England, recently decided to the keep the Vatican bank open after reform efforts made some progress in the aftermath of recent scandals.
Pope Francis, seen here in Vatican City shortly after meeting with Queen Elizabeth II of England, recently decided to the keep the Vatican bank open after reform efforts made some progress in the aftermath of recent scandals.
Photo by Oli Scarff/Getty Images

On Monday, April 7, John Hooper of The Guardian reported that Pope Francis has decided to keep the Vatican bank open instead of shutting it down after investigations into alleged misconduct that had been going on at least since June of 2012..

According to Hooper, "The Vatican bank is to stay in business despite speculation Pope Francis might close down the scandal-plagued institution. After months of investigation and consultation, the Vatican announced the pope had opted for a reform plan instead.

"The bank, officially called the Institute for the Works of Religion (IOR), has as its core business the management of cash deposited by Catholic religious institutions and members of the clergy. But its offshore status has been central to a string of scandals and controversies.

"The statement said the IOR would continue to 'serve with prudence'. It added that strict regulatory supervision and improvements in compliance and transparency were critical for the institute's future."

According to Wikipedia, the IOR was created in 1942 by a decree of Pope Pius XII. In the years since its founding, the institution has been at the heart of several scandals and at least one class action lawsuit. Among other things, the IOR has been accused of having ties with Germany's Nazi Party during and after World War II, money laundering and committing acts of fraud. In 2009, the IOR was accused of laundering transactions worth $218 million through a branch of another bank located near St. Peter's Basilica.

More recently, two IOR managers were also accused of money laundering. Tom Kington of the Los Angeles Times reported they may have connections to a former Vatican official who is also accused of wrongdoing.

According to Kington, "The road to transparency has not been smooth. Last month, Italian magistrates said that two former senior managers at the bank, Paolo Cipriani and Massimo Tulli, would stand trial on charges of violating money-laundering regulations. The two managers were allegedly close to senior prelate Nunzio Scarano, a Vatican functionary who is on trial on charges of trying to smuggle the equivalent of about $27.5 million into Italy in a tax-dodging scam."

The IOR's efforts to improve how it conducts its business appear to be a step in the right direction. Kington added that the investigation has had some positive results.

According to Kington, "The pope’s decision to save the IOR reflects the promising results of a transparency drive launched by his predecessor, Benedict XVI, which has seen the bank adopt internationally approved standards and procedures. An investigation of the bank's 18,900 accounts is due to conclude this summer; dozens of lay account holders who do not match the bank's new tightened-up customer profile have been ordered to close their accounts.

"In December, Moneyval, a Europe-wide monitoring committee, said the Vatican had made real progress in its reform program since the committee's first report in 2012."

Hooper added that several hundred accounts have been closed as part of the IOR's efforts to comply with international banking standards. He then gave several examples of goals they are trying to meet as part of their reform program.

According to Hooper, "An IOR spokesman said the management's priority would be to screen clients by early summer, integrate the bank with other Vatican financial institutions and introduce operational improvements."

Kington reported that in July of 2013, Pope Francis wasn't certain about the fate of the IOR. He suggested that it might become a charitable organization or that he might close it down. The latest information seems to indicate that people with the Vatican are happy with the progress that has been made in cleaning up the IOR and that it will continue to function as a banking institution.

According to Kington, "Max Hohenberg, a spokesman for the bank, said the announcement on Monday 'represents a powerful endorsement of our very mission and the hard work accomplished over the past 12 months.'"

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